Most angel pitches I get seem to suggest the use of funds will go to salary, both to the founders and to immediate new hires.
Gabriel mentions initial funds should go towards distribution experimentation rather than into salaries, usually the highest cost in a company. Once you have found profitable distribution, you are ready to scale up and use more resources to reach more people.
We need a real designer because we suck at design. Have you really tried yet? Really? Usually not.
Unless you are polymath, there are many areas in a startup where you are not an expert. Design, marketing, development, copywriting, sales, etc…
For example, I am not confident at copywriting so I spend a lot of time thinking each word I write on my websites, rewriting them, and often I only get a mediocre result. An expert would do the same thing better, quicker and would enjoy it. It doesn’t mean I should hire somebody. Instead I could simply outsource or hire freelancers: I’d get limited costs and better productivity.
Hiring freelancers has an initial cost of searching for the right quality people but once you found your gems, it is worthwhile. Throughout my last years developing products, I met talented people from Romania, Russia, and Philippines that I keep contacting.
My last product being TaskArmy.com, a website that connects clients and freelancers, I have met many more talented freelancers that I hire for my own projects.
Gabriel also suggests in his article to adopt the philosophy of continuous improvement. Rather than trying to get everything perfect at the beginning, focus on the essentials and grow from there. This is also something the lean startup movement recommends via concepts like the MVP, or constant monitoring of your metrics.
This point is not true only for financial matters. At the beginning of a project, your motivation is your highest risk. Getting users as early as possible allows you to replace your inconsistent motivation with a continuous flow of recommendations, complaints, and messages. This really helps to keep going on a project.
The wrong person can negatively impact your startup.
This is probably one of the strongest points of his article. It is good to remember though that not hiring someone can also impact negatively in lost opportunities and inferior quality and inferior productivity.
So when is it good to hire someone?
Some of the companies Gabriel invests in define hiring milestones. “We will hire someone once we reach $XXXX/month.”.
But of course if you run a bootstrapped company, the answer will probably be “When we can afford it”.